Two CEOs whose latest acquisition plays ended in a mess

Corporate Chicago's top two deal-makers have flubbed their latest takeover plays. Mondelez International CEO Irene Rosenfeld isn't getting a deal she wanted badly. Miles White of Abbott Laboratories, by contrast, appears stuck with a deal he no longer wants.

These uncharacteristic setbacks underscore the hazards for corporate honchos as M&A mania sweeps the globe. In such a highly charged environment, pressure to cut deals makes miscues almost inevitable.

Let's start with Rosenfeld. The longtime packaged-foods executive built her reputation on mega-deals. As CEO of Kraft Foods, she pushed through the $19 billion acquisition of British candy-maker Cadbury in 2010, even over Warren Buffett's objections. Two years later, she broke up Kraft, spinning off its grocery products as Kraft Foods Group and keeping snack brands for herself under Deerfield-based Mondelez. She hasn't stopped dealing since.

So it's not surprising that Rosenfeld felt confident about bidding for Hershey, despite the well-known obstacles to a takeover of the chocolatier. Hershey is controlled by a trust charged with protecting the best interests of a local school for disadvantaged children. On top of that, Pennsylvania's attorney general holds veto power over the trust's decisions.

Those snares thwarted Wm. Wrigley Jr.'s public pursuit of Hershey in 2002. Nevertheless, Rosenfeld believed a relatively modest 10 percent premium to Hershey's stock market price would succeed where Wrigley had failed. She may have seen recent changes at the trust as an opening.

If so, she quickly learned otherwise. Hershey spurned her initial $107-per-share offer and a sweetened $115 bid, informing Mondelez that any negotiations would have to start at $125. Unwilling to go so high, Rosenfeld retreated. While that was probably the right move, the quixotic quest for Hershey damaged Rosenfeld's reputation as a canny, tenacious acquirer and fueled talk that Mondelez itself might draw takeover bids.

DEAL 'EM OUT

“She publicly went after a deal that was doomed to fail,” says Erik Gordon, a professor at the University of Michigan's Ross School of Business. “Your confidence in her as a deal-maker is shot.”

Rosenfeld seems eager to re-establish her wheeler-dealer cred. In expressing her disappointment in the scotched Hershey deal, she stressed in a statement on Aug. 30 that among her options for “creating value” are acquisitions.

White's problem today is trying to undo a takeover. Medical-test maker Alere was only too happy to accept a $5.8 billion offer from White, a serial deal-maker who has engineered a long list of multibillion-dollar acquisitions and the 2013 spinoff of drugmaker AbbVie. Turns out, though, that federal investigators are probing Alere's billing and overseas business practices. Alere has said Abbott offered $50 million to get out of the deal. Alere declined and filed a lawsuit accusing North Chicago-based Abbott of dragging its feet on closing the acquisition.

Abbott denies the charge, but White hasn't concealed his buyer's remorse. An escape clause based on “material adverse change” in Alere's business might allow him to wriggle free. If not, he may have to buy a company he'd rather not own, hardly a recipe for success.

“It's a pain in the neck,” Gordon says. “That's why they offered them $50 million to go away.”

White will have to shoulder some blame if it comes to that. While Alere's problems may not have been fully apparent before the agreement, a deeper due diligence review might have uncovered enough warning signs to give him pause.